Insurance Australia Group (IAG)

The market is judging the insurance industry as being more equipped to handle the recent flooding than it was able to in 2011, as illustrated by
Insurance Australia Group
gaining 2 per cent in the past week. While the damage this time around is not on the same scale – Insurance Council of Australia estimates the costs in Queensland to be $320 million so far compared with $2.4 billion in 2011 – the insurers have taken sound preventative measures. IAG’s calendar 2013 catastrophe reinsurance program limits the group's maximum exposure to a first event to $150 million. Investors will be hoping the recent flooding is a mere blip on the radar for IAG’s golden run. The share price is up by more than 70 per cent over the past year, compared with the S&P/ASX 200, which is up by about 15 per cent in the same time. Morgan Stanley reckons the run can continue, with an “overweight" rating on the stock and a price target of $5.50.